Costco is estimated to sell up to $200 million worth of gold a month, but have Americans who bought it made a profit?
Those who bought last year or early this year before the price of gold rose will have made profits, DailyMail.com research shows. Those who purchased more recently will have to wait and see.
The wholesale retailer began offering 1-ounce bars last summer and executives reported they were flying off the shelves.
In the months since, Costco has embraced the trend by stocking an ever-expanding range of bars and coins and, according to Wells Fargo, is selling between $100 million and $200 million worth of gold a month.
It comes as gold prices continue to surpass record levels while inflation persistently hits the US economy. This year, spot gold prices have risen more than 13 percent.
Costco is now selling up to $200 million worth of gold a month, a Wells Fargo analyst estimated.
Costco’s 1-ounce 24-karat bars cost about $1,950 in September. This week they were around $2,400. Pictured is one of Costco’s 1-ounce gold bars listed on their website in December.
When Costco started selling 1-ounce 24-karat bars in September, they cost about $1,950. This week they cost $2,369.99, although they sold out on Wednesday.
It means that the cost difference between bars sold in September and now is $420. Even since January, when they were priced at $2,069.99, the bars were $300 more.
This means that owners who purchased last year, or even early this year, would see returns of several hundred dollars if they sold the bars.
Of course, owners can’t simply resell them to Costco for the current price the store sells them at.
But owners could get 95 to 98 percent of the current market price of gold at one of the many companies that buy gold online or in malls, or at a precious metals broker.
The rise in the price of gold this year appears to be attracting more people to buy Costco bullion, analysts say.
“Our work suggests there has been significant interest given Costco’s aggressive pricing and high level of customer confidence,” Wells Fargo equity analyst Edward Kelly said in a note to clients on Tuesday.
“Increasing frequency of posts on Reddit, rapid online product sales, and strong monthly sales of Costco’s eComm suggest a strong rebound in momentum since launch.”
Its predictions are significantly higher than sales, as executives indicated during an earnings call in December.
Costco’s then-chief financial officer, Richard Galanti, said the company had sold about $100 million in gold bars in its fiscal quarter ending in late November 2023.
However, the company has since significantly increased its gold product offering. In addition to the two gold bars he sold last year, there are also gold coins available.
These include the ‘American Eagle Gold Coin’ and the ‘American Buffalo Gold Coin’.
Pictured are two new gold products that Costco is selling: the ‘American Eagle Gold Coin’ and the ‘American Buffalo Gold Coin’.
The retailer has also increased sales limits to five per customer, up from two previously.
However, increased sales don’t necessarily translate into significant profits for Costco, according to Kelly.
That’s because it offers executive members 2 percent cash back and another 2 percent for those who use their Citigroup credit cards, he said.
“Pricing at that level and shipping costs suggest this is a very low-profit business at best,” he wrote in the note.
Americans looking to invest in gold today have two very different options.
They can buy physical gold, such as Costco gold bars, or an exchange-traded fund (ETF), which behaves like a stock that tracks the value of gold.
1-ounce gold bars were listed on Costco’s website for $2,369.99 this week, slightly above the current spot price of $2,347, according to APMEX.
This is because the retailer has to make a small profit on top of the costs of manufacturing and shipping the bars.
